九位VC谈一季度加密融资：走出低迷，但不及上轮牛市

Original Title: Nine crypto VCs on why Q1 investments were so hot and how it compares to previous bull market

Original Author: Jacquelyn Melinek, TechCrunch Reporter

Original Translation: Luffy, Foresight News

Dragonfly Capital partner Tom Schmidt told TechCrunch that if the cryptocurrency venture capital landscape in 2023 was like a pot of cold water, the first quarter of 2024 is when the water starts to boil before the bubble forms.

He's not wrong. According to PitchBook data, in the first quarter of 2024, the cryptocurrency and blockchain sector raised a total of $25.2 billion. This is about 25% higher than the $20.2 billion raised in the fourth quarter of 2023.

Arca portfolio manager David Nage said, "It's an unusually busy period right now, it feels like 2021. The funding in 2021 was like having a gun to your head, you had to do it, and that feeling is back." Nage mentioned that his company tracked over 690 cross-stage financings in the first quarter, about 30% to 40% higher than the low point in 2023.

CoinFund co-founder and CIO Alex Felix stated, "In the first quarter, the financing outlook for crypto venture capital is cautiously optimistic, with companies breaking free from the financing difficulties of the past two years."

Felix added that despite a significant year-on-year decrease in venture capital and cryptocurrency financing in 2023 (about 65%), trading activity has significantly increased.

Why the Recovery Now?

Part of the reason for the warming of the crypto venture capital market is the positive impact of last year's Ripple and Grayscale litigation victories, as well as the positive sentiment towards DeFi on Solana. Additionally, demand for Bitcoin has been increasing following the SEC's approval of a spot Bitcoin ETF.

"Another thing affecting the market is that we are still alive," Nage said, "I know it sounds funny to say that, but after the collapses of LUNA, BlockFi, FTX, and the banking crisis, people thought we would die, but we didn't."

Looking at the macroeconomic background, this trend in cryptocurrencies may not stop soon. Galaxy Ventures General Partner Mike Giampapa stated, "With the launch of cryptocurrency ETF products, Bitcoin halving, expected rate cuts before the U.S. presidential election, the investment in cryptocurrencies will continue to heat up." "We also see institutional interest in cryptocurrencies starting to translate into actual actions."

For example, BlackRock is launching a tokenized money market fund on the Ethereum blockchain, which may intensify competition pressure on traditional financial institutions and bring about more adoption.

Where the Trades Are Flowing

Overall, funding for crypto startups in various areas, from DeFi to SocialFi to Bitcoin L2, is on the rise. "We see 30 to 40 transactions every week, which is 10% to 20% higher than the previous quarter," Nage said.

Giampapa stated that the number of new companies and old companies that have been underperforming during the bear market restarting their funding has increased. "The market in 2024 will be a story of 'rich' and 'poor,' with new companies developing according to popular narratives, securing funding at high valuations, while many other companies will collapse," he added.

Currently, SocialFi mainly refers to decentralized social media in the Web3 world, which is very popular. Bi.social recently completed a $3 million financing round, and the fund for the decentralized social network protocol Mask Network raised $100 million to further support similar applications. Some success in this area can be attributed to decentralized social application networks like Farcaster, which are attracting new audiences using Web 2.0 technology. Web3 games are also rapidly expanding, with hundreds of new games expected to be launched later this year.

Schmidt said that cryptocurrencies, artificial intelligence, blockchain, and anything related to zero-knowledge "are all hot topics now."

Tekin Salimi, founder of dao5, said, "Given the huge expectations people have for the potential impact of artificial intelligence on the global economy, we expect this trend to continue in the foreseeable future."

For example, blockchain projects that integrate modular and integrated artificial intelligence (such as 0G Labs, which raised $35 million in seed funding) have also attracted the attention of venture capitalists.

Founder-Friendly Market

Salimi stated that competition among venture capital firms is creating an environment where project founders have more leverage in financing negotiations. Michael Anderson, co-founder of Framework Ventures, said, "Recently, the market is not lacking in greedy capital."

Marthe Naudts, partner at White Star Capital's digital asset fund, said, "This is advantageous for founders because in oversubscribed financing rounds, investors are now selling their value in reverse." This means that some investors have to show founders why they should choose them. "Founders now have the ability to choose and set terms."

However, Felix stated that power has not truly shifted from investors to founders but that both parties have reached a "perfect balance." "Founders benefit from more urgent financing rounds, valuations have slightly rebounded from recent lows, and venture capital firms have gained more protective and favorable deal structures," he said.

It is worth noting that valuations vary greatly based on the quality of teams and industries, Schmidt said. Some startups that were successful in the last market cycle are repricing through down rounds or delaying financing, while others are new faces.

Schmidt pointed out that before the seed round, valuations for consumer-focused cryptocurrency projects are usually less than $10 million, while valuations for industries like cryptocurrency and artificial intelligence can reach $300 million or higher. For example, according to Messari data, the AI prediction market PredX raised $500,000, with a post-investment valuation of $20 million. Additionally, the Web3 AI social network CharacterX raised $2.8 million in seed funding, with a post-investment valuation of $30 million.

For seed rounds, Nage expects pre-investment valuations to be between $25 million and $40 million, with some startups in the seed round valued at $80 million. Schmidt stated that the average seed round valuation is between $30 million and $60 million.

"Valuations have risen significantly, and even though larger, more mature companies have already completed financing, founders still have many options," Anderson said. "Some valuations we see at this early stage of the cycle are a bit out of line."

Schmidt said that valuation shifts are also being driven by cryptocurrency market sentiment, with Bitcoin hitting all-time highs, Solana surpassing $200, and Ethereum nearing $4,000, marking a "huge emotional shift," according to Nage.

For founders, seed round financing is still the easiest because many small funds and angel investors are willing to write the first check at the lowest threshold, Felix said. "However, I don't expect an immediate improvement in the completion rate of Series A financing rounds, which has dropped from over 20% to around 15%. Raising over $10 million will still be a quite challenging task."

Many venture capitalists are still working to avoid falling into the trap of overvaluation due to hype, while also realizing they cannot just sit back. Thomas Tang, Vice President of Investments at Ryze Labs, said, "Financing rounds being oversubscribed within days, and investments being rejected or moved to higher-valued subsequent rounds, are quite common."

The Token Economy Makes a Comeback

Nage said, "Since